IEA says oil output near capacity
The International Energy Agency says operating oil fields around the globe are pumping as much black gold as they can. Yet, there are numerous fields untapped. John Dimsdale reports on why oil companies haven't drilled into them.
Oil rigs in Culver City, Calif. (David McNew/Getty Images)
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KAI RYSSDAL: This was a day of relative calm in world oil markets. After a spike above $135 a barrel overnight crude has tipped back to $130. Lookout, though. Because if the International Energy Agency's right, that might be nothing. The IEA's got a reputation as a straight shooter when it comes to oil supplies. The group said today it's working on a revamp of its current estimates. A survey of how fast we're using up what crude we do have. We asked Marketplace's John Dimsdale to find out whether oil companies have been looking hard enough.
JOHN DIMSDALE: The IEA's review of the world's biggest 400 oil fields won't be ready until November, and the agency won't speculate on the conclusions. But the Wall Street Journal reports the initial findings are that supplies of various liquid fuels will fall short of expected demand by 2030. The reason: aging, depleted oil fields and a lack of investment in new ones.
SARA BANASZAK: It's definitely a move in a more pessimistic direction.
Sara Banaszak with the American Petroleum Institute says as oil becomes more expensive, demand will go down as conservation and alternative fuels become more attractive. Still, she says U.S. companies are pouring plenty of money into finding new oil fields.
BANASZAK: They're doing as much as they can, and they're investing record amounts. But it's also true that the publicly held oil companies of the United States don't control the lion's share of the world's resources.
More than 80 percent are owned by nationalized oil companies.
Daniel Yergin of Cambridge Energy Research Associates says the U.S. should be encouraging those oil-rich nations to open up their industries to foreign investment.
DANIEL YERGIN: For instance, the U.S. government played a very important role in the 1990s, encouraging investment in countries like Kazakhstan and Azerbaijan in seeing that the pipeline was developed. And now there's a million barrels a day flowing out of Azerbaijan to the Mediterranean.
It takes 10 or 15 years to develop new oil fields, and Yergin hopes today's high prices and concerns about the future will generate more investments in energy sources of all kinds.
In Washington, I'm John Dimsdale for Marketplace.
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From DC, 05/23/2008
Oil companies will do all they can, at a profit margin commensurate with the marketplace. If you believe recent marketing plugs in the Washington post, their profit-per-share is in line with many other industries. Raw profit dollar figures are no more important than figures of "recoverable oil." It must be *economically* recoverable, and at a sustainable level of earnings-per-share.
From Birmingham, AL, 05/23/2008
No offense, Kai, but IEA's reputation is one of not of shooting straight but of consistently guessing at the most optimistic scenarios and taking the bogus numbers from the oil-producing nations at face value without any investigation or question, so when the IEA finally admits it's been wrong, it really is news.
We are about to see oil get a lot scarcer and a lot more expensive, and it's going to change the lives of everyone reading this note and everyone listening to your program. And here's a hint: the national oil companies, be they ever so evil, can't do a thing about it. It's going to come down to truly informed citizens willing and able to make the tough decision to use a lot less energy.
And at some point, Kai, you need to be willing to say the words "peak" and "oil" together. It's here, and it's real.
From pacific grove, CA, 05/22/2008
re: oil output story. If you would, please listen to Ms. Banaszak's response to your question about Big Oil's search efforts. The first six words came out fine then she had to drag "can" kicking and screaming from the recesses of her throat. This is what she really said, "Well, in truth, our oil companies are not doing all they can to maintain petroleum supplies."
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